Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

In 1936, John Maynard Keynes published The General Theory of Employment, Interest and Money, and one of the key insights of that book was to draw a distinction between the short run and the long run. In the short run, Keynes pointed out that it was important to have policies that would get the economy out of a temporary slump, such as that the world was in the mid-1930s. It could either be monetary policy or fiscal policy, but where it was fiscal policy he urged that it might be important to put in place temporary measures that encouraged businesses to invest over the short term to get the economy out of a hole. Keynes distinguished this from measures that might be put in place to boost long-run aggregate demand. Those measures would seek to be stable and predictable; they would not have sudden death thresholds.

Today, the House is facing a measure which, frankly, would be better crafted to get the economy out of a temporary slump than to feed long-term demand. In its policy on accelerated depreciation, the government has chopped and changed over the years. In office, Labor put in place a higher level of instant write-off, increasing the threshold from $1,000 to $6,500—a stable and sustainable level which we felt would do a great deal to encourage investments by firms. Accelerated depreciation has good economic insights behind it. By acceleration depreciation schedules firms have a greater incentive to purchase fixed assets for their businesses. Under the expenditure tax laws in place in Australia, the GST allows you to write off inputs in the same year as you pay the tax, further up the chain. But, in the case of company tax or personal tax, the items are depreciated over succeeding years. Accelerated depreciation tips the hand of a business owner towards putting in place investment that they might not otherwise have done. It is, in the view of many economists, a more efficient way of incentivising investment than changing the corporate rate.

But the key question is whether or not it is best done in a stable way which provides clear predictability or with sudden death cliffs. When Labor put out measure in place we did so at a $6,500 level, because we felt that that was what the economy could bear going forward. But yet in the coalition's first budget they decreased that threshold, taking it down from $6,500 to $1,000. Then, in their second budget, in the 2015 budget, they increased up to $20,000 but with a sudden death cut-off of 30 June 2017. The government now proposes to push out that cut-off to 30 June 2018, which pushes the problem down the road but does not put in place a stable level of accelerated depreciation for small business entities. Labor has held a clear and consistent position on accelerated depreciation. We opposed the government when they cut the accelerated depreciation threshold from $6,500 to $1,000. When the government increased it to $20,000, we also warned that that might be a level that was not sustainable. Indeed, this bill reflects the government's own concerns about the sustainability of a $20,000 threshold, because again a sudden death threshold is put in place. To look at accelerated depreciation threshold under the coalition is to look at a mountain range—a threshold which started at $6,500 dollars, plummeted to $1,000, went back up to $20,000 and then is scheduled now under this bill to drop back down again.

Let me be clear: Labor supports accelerated depreciation, and I have outlined the strong economic principles behind this. In that, we stand alongside the Council of Small Business Australia, the Australian Chamber of Commerce and Industry, the Australian Small Business and Family Enterprise Ombudsman and the Institute of Public Accountants. We recognise the value of a accelerated depreciation but, unlike the government, we also recognise the importance of setting policies for the long-term. Labor's small business policies are intended to create enduring growth. When we committed to the National Broadband Network with fibre to the premises and to getting the gigabit speeds that NBN connections with fibre to the home can now generate, we put in place a long-term policy. When Labor commits to investing in our schools, providing the human capital that small businesses need, again it is long-term investment. These things matter. I held a small business roundtable in Burnie. I was speaking to a small business owner there about his frustrations with the National Broadband Network. He told the story of the fact that with his small business he often has to upload large design files. He will set the upload going, walk down to the local cafe, come back and often finding the upload is still going. His connection is buffering and his business is suffering. The policies of this government on education also leave much to be desired. By ripping money out of schools and out of universities, the latest budget takes away the productive potential for Australian small businesses. Australian small businesses need a better human capital workforce than this government is giving to them. They need policies for the long-term, not sugar hits for the short-term.

Labor has also committed to access to justice reforms, and we took that to the last election. They will provide an opportunity for small businesses to take anticompetitive behaviour to court. Currently small businesses are deterred from taking up private litigation against anticompetitive behaviour because they are concerned about the armies of lawyers that the big end of town can array against them. The risk of having to pay the other side's legal fees if the action is unsuccessful is a significant deterrent. Labor's access to justice reforms restore the balance by letting small businesses request a 'no adverse costs' order early in a court case. It will help level the playing field and encourage more small businesses to take on anticompetitive behaviour and it reflects Labor's strong commitment to a level playing field in our competition laws. Labor believes that we need to have tougher penalties for anticompetitive conduct and that we need to double the ACCC's litigation budget. Labor believes that it is important for small businesses to be protected from dodgy phoenix operators through a director identification number, dealing with the fact that it is currently almost possible to register your dog as a director. The tax commissioner told the Senate yesterday, when answering a question from Senator Williams, that he could register Senator Williams as a director in a firm that he controlled and Senator Williams would not even know about it. That is why we need a director identification number: to protect honest small businesses. Labor's phoenixing policy also increases the penalties and gets the standard of proof right. These are pro small business measures from this side of the House.

But this measure, which is assisting small and medium businesses—by extending the turnover threshold from $2 million to $10 million—has a troubling deadline coming down the track. We on this side of the House are concerned that small businesses get the stability they need from a terribly unstable government. This government has chopped and changed prime ministers and ministers in portfolios across the board. We have had multiple ministers responsible for almost every single policy. Indeed, one of the policy areas for which I am responsible, the Australian Charities and Not-for-profits Commission, has had no fewer than five coalition ministers responsible for it under the Abbott-Turnbull government.

Providing stability is about more than three word slogans such as 'jobs and growth'; it is about making sure that our tax laws, our competition laws and, indeed, our litigation rules are appropriate to look after the needs of small business. Labor's competition policies are pro-consumer but they will also assist start-up businesses. In Australia, we have had a troubling stagnation in the rate of new business formation over recent years. In a piece in the Monthly recently, Adam Triggs and I pointed out that, over the past couple of decades, we have seen a significant ramp-up in merger activity and a significant stagnation in small business start-up rates. One of the ways of spurring that is through appropriate competition laws. Labor's proposal is that we increase the civil penalties in the Australian Consumer Law from $1.1 million to $10 million. And we are very pleased this year to see the government finally falling into line and adopting that policy in the budget.

But we also call on the government to adopt the other pro-competition pro-small-business policies that we have been calling for. We call on them to adopt the European Union's penalty system for anti-competitive conduct. It is based on 30 per cent of the annual sales of the relevant product or service multiplied by the number of years over which the infringement took place and limited to the greater of 10 per cent of annual turnover or $2 million. We call on the government to double the ACCC's litigation budget from its current $24.5 million to $49 million.

We call on the government to give the Australian Competition and Consumer Commission an independent market studies power so it is able to undertake its own investigations on issues such as pricing discrepancies and increased market concentration. The government has called the consumer watchdog in on recent months over issues such as energy and the banking sector. But if the consumer watchdog had a market studies power, it could immediately be on the case rather than waiting to be given those additional powers on an ad hoc basis by the government of the day. Labor wants the act amended to apply higher penalties for conduct that targets or disproportionately impacts disadvantaged Australians and to encourage the consumer watchdog to focus its investigatory efforts on cases that affect disadvantaged Australians.

It is important that competition law, which goes back to the Trade Practices Act 1974—a great achievement of the Whitlam government—works for consumers and firms. Labor is the party of the Trade Practices Act; national competition policy under the Hawke and Keating governments; and the Australian Consumer Law and the criminalisation of cartels under the Rudd and Gillard government, with the leadership of the member for McMahon, Chris Bowen. Australians can trust Labor to get it right on competition policies and stable economic policies. Through our Access to Justice policy, our competition reforms and our commitment to ensuring the tax policies are right for the long term, Labor is truly the party of small business. We recognise that the measures in this bill will provide assistance to small and medium businesses. But we again raise our reservations about a measure which would have been recognised by Keynes, writing two generations ago, as better suited to temporary stimulus than to the ongoing stable policy that Australian small and medium size businesses so desperately need.

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